DBRS Assigns Provisional Ratings to Axis Equipment Finance Receivables IV LLC, Equipment Contract Backed Notes, Series 2016-1

DBRS Inc. (DBRS) has today assigned provisional ratings to the following Equipment Contract Backed Notes, Series 2016-1 Notes (the Notes) to be issued by Axis Equipment Finance Receivables IV LLC (the Issuer):

-- $166,411,000, Series 2016-1, Class A Notes rated AAA (sf)
-- $8,737,000, Series 2016-1, Class B Notes rated AA (sf)
-- $6,977,000, Series 2016-1, Class C Notes rated A (sf)
-- $8,822,000, Series 2016-1, Class D Notes rated BBB (sf)
-- $5,662,000, Series 2016-1, Class E Notes rated BB (sf)
-- $4,623,000, Series 2016-1, Class F Notes rated B (sf)

The provisional ratings are based on DBRS’s review of the following analytical considerations:
-- Form and sufficiency of available credit enhancement and its ability to withstand the expected losses under various stressed cash flow modeling scenarios.
-- While the structure allows for approximately three-month prefunding period, during which the acquisition by the Issuer of new contracts into the collateral pool will be permitted, the proposed concentration limits will mitigate the risk of material migration in the collateral pool’s composition or risk profile.
-- DBRS deems Axis Capital, Inc. (Axis Capital) to be acceptable originator and servicer of equipment backed leases and loans with a backup servicer. In addition, Wells Fargo Bank, National Association, which is an experienced servicer of equipment lease backed securitizations, will be the backup servicer for the transaction.
-- The Asset Pool primarily consists of essential use equipment with obligors accounting for less than 1% of the Asset Pool involved in the domestic oil and gas production sector. In addition, close to 89% of the Contracts in the collateral pool as of the September 30, 2016, were supported by personal guaranties with a weighted-average guarantor FICO score of 706. The vast majority of titled assets are financed under contracts where Axis Capital does not own such assets, which mitigates the risk that titled vehicles may be entangled in the bankruptcy estate of the originator.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating U.S. Equipment Lease and Loan Securitizations (June 2015), which can be found on our website under Methodologies.

The rated entity or its related entities did participate in the rating process. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities.

Please see the attached appendix for additional information regarding sensitivity of assumptions used in the rating process.

The full report providing additional information and analytical detail is available by clicking on the link under Related Research at the right of the screen or by contacting us at info@dbrs.com.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.